Abraxas Petroleum Corporation (NASDAQ:AXAS) is pleased to provide the
following operational and financial update.

Eagle Ford Shale

In McMullen County, the Mustang 1H produced an average 1,152 boepd
(1,025 barrels of oil per day; 500 mcf of gas per day; 44 barrels of NGL
per day) on a restricted choke over its first 30 days of production. The
well continues to flow to sales at a rate of 999 boepd (847 barrels of
oil per day; 914 mcf of gas per day) plus NGLs on a 22/64 ” choke.
Completion crews are currently rigging up on the Corvette C 1H to
complete the well with a 20 stage fracture stimulation. Abraxas recently
reached TD on the Gran Torino A 1H with a fracture stimulation date
anticipated in February. Abraxas today spudded the Company’s sixth well
at WyCross, the Mustang 3H. Abraxas owns a 25% working interest in the
Corvette C 1H and an 18.75% working interest in the Mustang 1H, Gran
Torino A 1H and Mustang 3H.

Williston Basin

Drilling continues on the Company’s Lillibridge East PAD with
intermediate casing set on the 1H and 2H. Abraxas just reached TD on the
curve of the Lillibridge 3H. After setting intermediate casing on the
Lillibridge 3H, the rig will move to drill the curve of the Lillibridge
4H. Abraxas recently received final consents on the Lillibridge PAD and
now holds an approximately 34.14% working interest across the four
Lillibridge wells. The Ravin 2H and 3H are now anticipated to be
completed mid-February. Abraxas owns a 49% working interest in both the
Ravin 2H and 3H.

Financial Update

As previously announced, the approximately $22mm in asset sale proceeds
in the fourth quarter were applied directly to paying down the Company’s
revolver. At December 31, 2012 the company had $113 million drawn on its
$150 million credit facility and approximately $575,000 in cash
providing approximately $38 million in liquidity.

Bob Watson, President and CEO of Abraxas, commented, “We are quite
pleased with the early performance of the Mustang 1H. This is our third
well in the WyCross area, and materially outperformed our previous best
well the Cobra 1H. In the Bakken, we elected to complete the Ravin 2H
and 3H simultaneously in February opposed to individual completions a
month apart, which should lead to reasonable cost savings. We look
forward to updating the market post our upcoming Bakken and Eagle Ford
completions.”

Abraxas Petroleum Corporation is a San Antonio based crude oil and
natural gas exploration and production company with operations across
the Rocky Mountain, Mid-Continent, Permian Basin and onshore Gulf Coast
regions of the United States and in the province of Alberta, Canada.

Safe Harbor for forward-looking statements: Statements in this release
looking forward in time involve known and unknown risks and
uncertainties, which may cause Abraxas’ actual results in future periods
to be materially different from any future performance suggested in this
release. Such factors may include, but may not be necessarily limited
to, changes in the prices received by Abraxas for crude oil and natural
gas. In addition, Abraxas’ future crude oil and natural gas production
is highly dependent upon Abraxas’ level of success in acquiring or
finding additional reserves. Further, Abraxas operates in an industry
sector where the value of securities is highly volatile and may be
influenced by economic and other factors beyond Abraxas’ control. In the
context of forward-looking information provided for in this release,
reference is made to the discussion of risk factors detailed in Abraxas’
filings with the Securities and Exchange Commission during the past 12
months.